Gaming Guru

The Macau casino market ended 11 straight months of double-digit-percentage gaming revenue increases in January and recorded its lowest single month growth rate since October 2012 — but don’t think for one minute the region is crying poor.

The Macao Gaming Inspection and Coordination Bureau said Thursday casinos in the Chinese enclave collected $3.6 billion in gaming revenue from customers during January, a 7 percent increase from January 2013.

The figure comes in the first reporting period after Macau announced its casinos collected a record-shattering $45.2 billion in gaming revenue in 2013. Macau is the only legal gaming market in China.

Analysts said high-end wagering slowed at the end of January in anticipation of the highly lucrative Chinese New Year holiday, which began a week ago.

Union Gaming Group analyst Grant Govertsen, who is based in Macau, told his firm’s clients in a research report that visitation in Macau remained strong, but customers weren’t spending as much on gambling.

“Typically there will be a pullback heading into Chinese New Year,” Govertsen said. “This effect was probably exacerbated this year as the heavily family-oriented days leading up to (the holiday) fell at the very end of January and likely brought (high-end play) to a standstill to end the month.”

Las Vegas Sands Corp., Wynn Resorts, Limited and MGM Resorts International operate casinos in Macau, which has three dozen large and small gambling halls.

In 2013, Macau’s casino market twice recorded $4 billion revenue months including a single-month record of $4.6 billion in October. Macau’s annual gaming revenue was almost seven times more than the $6.5 billion recorded by Strip casinos in 2013.

Several analysts told investors not to read too much into a nondouble-digit-percentage revenue increase because of Chinese New Year.

RBC Capital Markets gaming analyst John Kempf said visitation to Macau during the initial days of Chinese New Year is up 13.5 percent more than the holiday’s corresponding days a year ago.

“Visitation growth from mainland China, which represents 73 percent of the total, is up 20.6 percent over the same period,” Kempf said.

He cautioned investors, however, that high-end players often try to avoid the Macau market during the period to avoid the large crowd of mass-market customers.

Deutsche Bank gaming analyst Carlo Santarelli told investors that although the results might be “disconcerting,” the first three weeks of January showed gaming revenue tracking up about 20 percent, so the softness came at the end of the month.

“Given the Chinese New Year (calendar) shift, volatility in the numbers was likely, and we would anticipate a stronger-than-previously-expected February,” Santarelli said.

Wall Street remains bullish on the three Nevada-based casino operators in Macau.

All three companies are building multibillion-dollar resorts on Macau’s Cotai Strip: the $4 billion Wynn Paradise, the $2.6 billion MGM Cotai and the $2.7 billion Las Vegas Sands Parisian. All three are expected to open by 2016.

The Cotai region is transforming Macau into an overnight destination for middle-class Chinese. The market had been viewed as a place for day-trip gamblers whose revenue was secondary to the revenue produced by superwealthy high-end players staying in the casinos’ over-the-top suites.

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